Yingli Green Energy (YGE) In A Perilous Reversal

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified Yingli Green Energy ( YGE) as a "perilous reversal" (up big yesterday but down big today) candidate. In addition to specific proprietary factors, Trade-Ideas identified Yingli Green Energy as such a stock due to the following factors:

YGE has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $19.8 million.

Yingli Green Energy Holding Company Limited, together with its subsidiaries, designs, develops, manufacture, markets, sells, and installs photovoltaic products in the People's Republic of China. Currently there is 1 analyst that rates Yingli Green Energy a buy, no analysts rate it a sell, and 3 rate it a hold.

The average volume for Yingli Green Energy has been 4.1 million shares per day over the past 30 days. Yingli Green Energy has a market cap of $573.8 million and is part of the technology sector and electronics industry. Shares are down 25.7% year-to-date as of the close of trading on Friday.

TheStreet Quant Ratings rates Yingli Green Energy as a sell. The company's weaknesses can be seen in multiple areas, such as its generally high debt management risk, disappointing return on equity, poor profit margins and generally disappointing historical performance in the stock itself.

Highlights from the ratings report include:

The debt-to-equity ratio is very high at 38.10 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Along with this, the company manages to maintain a quick ratio of 0.49, which clearly demonstrates the inability to cover short-term cash needs.

Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Semiconductors & Semiconductor Equipment industry and the overall market, YINGLI GREEN ENERGY HLDGS CO's return on equity significantly trails that of both the industry average and the S&P 500.

The gross profit margin for YINGLI GREEN ENERGY HLDGS CO is rather low; currently it is at 15.61%. Regardless of YGE's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, YGE's net profit margin of -8.36% significantly underperformed when compared to the industry average.

YGE's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 30.82%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.

YGE, with its decline in revenue, underperformed when compared the industry average of 10.3%. Since the same quarter one year prior, revenues slightly dropped by 1.1%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.